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Guest Post: Eric Janszen: We Are Witnessing The Death Of The Dollar

Tyler Durden's picture


Submitted by Adam Taggart of Chris

Eric Janszen: We Are Witnessing The Death Of The Dollar

What do you get when the producer of the world's reserve currency takes on too much debt? Nothing less than the end of the US Treasury-based monetary system.

So says Eric Jansen, economic and financial market analyst and proprietor of In chronicling the decline of the global economy over the past decade, Eric has formulated a framework called the "Ka-POOM" theory, which endeavors to understand how the immense run-up in global debt will be resolved.

In short, it looks at the at the credit bubble that began in the early 1980's, started accelerating in 1995, and has now reached epic proportions. The amounts are so staggering at this stage that Eric believes it is too politically undesirable to let natural market adjustments clear them away - the magnitude of the deflationary pain this would create is simply unacceptable for politicians looking to get re-elected. The only other available option left is to service these debts via a dramatically devalued currency. Hence the key role the Fed is playing today.

The Fed is at the epicenter of this process, intervening heavily to keep the natural corrective market forces at bay. In this, it has a dual strategy. The first is to keep asset prices high (i.e., fight asset deflation), which it is doing by keeping interest rates historically low. The second is to keep wage and commodity costs under control, which it primarily does via devaluing the currency (maintaining a "weak dollar").

And, of course, through its intervention, the Fed is doing all it can to keep the current financial system in place to perpetuate the process for as long as possible. The end result is a fundamental shift in risk from Wall Street to the taxpayer.

So the big question is: how long can this last?  Is there a point at which confidence in the system breaks and market forces finally overwhelm the intervention?

Eric's answers: "Much longer than most people expect." And "Yes."

First off, as the most important central bank in the world, the Fed has supernormal powers. In theory, it can expand its balance sheet infinitely. It's ability to absorb massive amounts of new liabilities is theoretically limitless - much of which can be easily concealed from an accounting standpoint.

And since the US is both the world's largest economy as well as the provider of its reserve currency, other countries are compelled to support the current regime. A mortal crack-up in the US economy would deliver undue pain to all its trading partners, so they continue to buy Treasuries in sufficient amount to fund US economic activity.

But that's not to say they're happy about it. And here's where attention should be paid (and where the importance of gold comes in).

For much of the past century, the United States comprised approximately 54-58% of the global economy. Today, it's share has shrunk down to about 18%. Meaning: it's relative importance to the global system has diminished.

Issuing the world's reserve currency is a privilege that must be continually earned through transparency and sound stewardship - qualities the US has been in flagrant lack of in the past several decades as it has been blowing asset bubbles and running trillion-dollar deficits via incurring massive debts and increasing its money supply tremendously. So, even as they continue to support the current Treasury-backed monetary regime, the world's central banks have begun hedging their exposure.

After several decades of being net sellers, the world's central banks became net buyers of gold in the second quarter of 2009. As Eric puts it:

There was no plan B in the global monetary system when it switched over to the US Dollar reserve basis for global monetary reserves. The only fallback is gold. Gold is the only reserve asset that central banks hold other than dollars and to some extent euros - but it is mostly gold. So gold is the fallback. What I thought was going to happen is that, over time gradually, that there would be an increase at some point in gold holdings by central banks as they hedged the marginal increase and the number of Treasury bonds that they needed to hold as a result of conducting trade with the US and also simply maintaining the US economy through low interest rates and providing sufficient investment to continue to offer the US government.

What is very interesting to me is starting in the second quarter of 2009, right after the financial crisis is when global central banks became net buyers of gold which to me indicated that they had as a group, determined that it was time to more seriously hedge their dollar assets, even as they continue to buy Treasury bonds to increase their hedging.

Before that there were effectively two teams, there were the buyers who were countries like India and Russia and China, and the sellers which are most of your European countries and that structure of the gold market occurred and was maintained until the second quarter of 2009 and it shifted to a much broader base increase in the number of governments participating in the gold market including Saudi Arabia, Mexico and other allies of the United States.

Eric sees this move by central banks of positioning themselves closer to the door as a natural step to the inevitable endgame here, which is the dissolution of the US Treasury dollar-based monetary system. Due to entrenched special interests, politics, escalating commodity scarcity, and other factors - he does not see the US taking necessary corrective action before confidence in the solvency of the US and its currency collapses.

As such, Eric advises investors position themselves into gold and assets that take advantage of rising rents and energy prices.

Click the play button below to listen to Chris' interview with Eric Janszen (runtime 43m:46s):



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Fri, 10/28/2011 - 21:17 | 1823325 jomama
jomama's picture

slow motion train wreck, bitchez.

Fri, 10/28/2011 - 21:24 | 1823336 Mr Lennon Hendrix
Fri, 10/28/2011 - 21:30 | 1823350 wanklord
wanklord's picture

What’s all the uproar?
It seems that most of Americans never bothered themselves to learn living within their means, save some money, plan for the future, get a decent education and avoid credit at all.

The blame must be placed specifically on the so-called Baby Boomers, a failed generation who really enjoyed the prosperity of the 50s and 60s; instead, they focused all of their deprived intellect in experimenting with all types of drugs and having very promiscuous sexual lives. These people have done nothing for this country and now they are so scared of potentially not being able to collect their government entitlements (paradoxically, they are the majority).

Therefore, America as a broken society is now paying the consequences of its own greed, lack of common sense and stupidity.

Someone said that Americans are just a bunch of stupid animals easy to manipulate and subdue. The sooner the US economy collapses the better, so the ignorant populace will finally learn NOT to live beyond their means – and stop blaming the government, since they don’t give a crap about people’s grievances.

Fri, 10/28/2011 - 22:32 | 1823371 Kitler
Kitler's picture

So it was sex and drugs in the 60's and had nothing to do with the wholesale purchase of the political process by those with wealth and lust for power resulting in the complete and utter destruction of the world's former economic superpower?

Interesting spin Herr Goebbels... but it's my guess that you are still bitter about never getting laid much.

So save your shiny pennies and nickels and dimes until you have enough to buy that new $100,000 home with CASH? Oops... it took you too long. Now because of the banksters easy credit the house costs $500,000 and your savings are worthless. Too bad so sad.

Then again you may be right... perhaps everyone should just go home, continue to take it up the ass, pay the bankers for their evil deeds, and just stop complaining.

Let me think about that one.

Fri, 10/28/2011 - 22:48 | 1823548 John Bigboote
John Bigboote's picture

Hey wanklord,

So, if someone walked up to you and said "I want to be your slave", you would say "great, sign here"?

Nice. You're a real ass hole.

Sat, 10/29/2011 - 00:50 | 1823745 flacon
flacon's picture

"The second is to keep wage and commodity costs under control, which it primarily does via devaluing the currency (maintaining a "weak dollar")."


How are commodity prices kept under control by devaluing the currency? I thought just the opposite happens when you devalue a currency - it takes more of the devalued money to buy as much. Is he inferring that wages and commodities are in a deflationary spiral and are becoming cheaper - thus the need to prop them up with more paper dollars? I thought commodities are very expensive and Americans earn so much money that they priced themselves out of the market - and the powers that be want to push them down, not bring them up...???





Sat, 10/29/2011 - 01:11 | 1823778 Excursionist
Excursionist's picture

Yep - the error calls into question whether the author skipped the day they taught Macro 101.  Doesn't necessarily detract from the overall message, but the logic is specious.

Sat, 10/29/2011 - 10:31 | 1824117 Nate H
Nate H's picture

In this case I agree, but in general, skipping Macro 101 might give some bright 20 something circa 2011, an advantage over the rest of us

Sun, 10/30/2011 - 10:12 | 1826097 FrankDrakman
FrankDrakman's picture

I quite disagree. The problem is not learning Macro 101; the problem is that so many economists/advisers/Fedsters seem to forget everything about it once they get into the financial kitchen. Keynes said run deficits in bad times, surpluses in good times. But virtually every politician everywhere seems to forget the second half of the prescription. Even in Slick Willie's time - you know, when we were enjoying the peace dividend and full employment, whilst we contemplated "The End of History" - the US only ran one "surplus", and that was more the result of some jiggery-pokery than honest accounting.

I studied engineering at university, but I also took some courses in economics. (Our econ prof loved us, as we actually knew math unlike his usual Arts&Science morons) The great thing about engineering is while you do study theory, you pay more attention to results. For example, physicists said it was impossible, in aerodynamic theory, for bumblebees to fly. Engineers saw the bees flying, decided there was something wrong with the theory.

So when I hear economic theorists tell me that printing money is really not a bad thing, I think back to Germany, Russia, Hungary, and others in the 1920's, Argentina in the 70's, Mexico in the 80's, Zimbabwe just a few years ago, and I say "Hmmmmmm...". People can spout theory all they want, but empirical observations say the bees are still flying, and the dollar will come crashing.

But, I will add Keynes' famous caveat: "Markets can stay irrational longer than you can remain solvent".

Gold, bitchez!

Sat, 10/29/2011 - 05:29 | 1823935 Henri-Gatien Co...
Henri-Gatien Comte Bertrand's picture

"i can make it rain no matter what the mother nature plans"


Sat, 10/29/2011 - 06:59 | 1823973 deflator
deflator's picture

 I think the author means that there is profit in devaluing the currency because most econ 101 students believe that the world is powered by money and more money will always produce more energy.

Our economic model inherently discounts the value of energy(your labor is energy) while simultaneously places a premium on money (that they can produce out of thin air).

Sat, 10/29/2011 - 07:00 | 1823974 Hephasteus
Hephasteus's picture

I think you are confusing someone who jacks off and watches suzy fucking orman with a real live sentient being.

Sat, 10/29/2011 - 09:25 | 1824062 s2man
s2man's picture

"How are commodity prices kept under control by devaluing the currency?"

By keeping the prices from deflating.  Read the context. Asset deflation is their boogie man. To boil it down, the bankers cannot, CANNOT have the assets, physical and financial, deflate, because they have loaned against them. 

This is why I am betting on inflation to hyperinflation instead of deflation.  Long phys, short currency.

Sat, 10/29/2011 - 19:39 | 1825279 Seer
Seer's picture

"To boil it down, the bankers cannot, CANNOT have the assets, physical and financial, deflate, because they have loaned against them."

People don't understand that DEFLATION is what the rich fear most.  Whether it's primary or not, loan failures ARE a huge concern.  I'd say that there's an even DEADLIER casualty, and that's that when the house of cards is no longer valued that their entire power structure crumbles: they stay in power because they control the assets; if assets aren't worth anything then their power is essentially gone.

That stated, inflation also isn't a thing of beauty to them.  In these days it's more readily apparent that inflation could, unlike in the past, roll right over the edge into hyperinflation.

Rock and hard spot.  This can NOT work out because the entire system was predicated on infinite growth (somewhere along the line there HAS to be meaningful physical backstops to our currencies [the article points this out] and we're on a finite planet.

Sat, 10/29/2011 - 12:23 | 1824169 CalFord
CalFord's picture

Wrong Kilter, moral decay must occur first.

Sun, 10/30/2011 - 17:48 | 1826820 Chuck Walla
Chuck Walla's picture

Then again you may be right... perhaps everyone should just go home, continue to take it up the ass, pay the bankers for their evil deeds, and just stop complaining.


Kitler, I think many will continue to misunderstand their real circumstances. While I disagree that Americans are specifically easy to manipulate, it seems to cut across all cultures.  Indeed, many thought this system would go on forever.  Obvious, basic economics and critical thinking are avoided in school.


As for Baby Boomers, Obama's parents bit the Commie apple hard and indoctrinated their child in it. Steeped his brain in Socialism and now we reap the whirlwind because everyone was too afraid to look behind the "man" to see who he really was.


The Leftward Bully Boy of PC has done its work. This is the coming insurrection. Eric doesn't account for that.

Fri, 10/28/2011 - 21:51 | 1823380 Pure Evil
Pure Evil's picture

Wanklord, Cut and Paste much?

Fri, 10/28/2011 - 22:43 | 1823543 CIABS
CIABS's picture

hey, wanklord polished his literary piece de resistance for a long time, and since then he has been sharing it with us, repeatedly, as a zerohedge comment.

Sat, 10/29/2011 - 00:38 | 1823732 BigDuke6
BigDuke6's picture

If that got you fired up then you may want to look at the link and scroll down to the second photo....

goddam whiteman as a chinamans flunky... next its gonna be 10 chinese pornstars mullahing jenna jameson...

sorry for out of date actress example....

Sat, 10/29/2011 - 03:35 | 1823889 saulysw
saulysw's picture

An interesting find...

Sat, 10/29/2011 - 02:01 | 1823830 Buckaroo Banzai
Buckaroo Banzai's picture

Wanklord is one of the finer Zerohedge trolls.

Well trolled, Lord Wanker!

Sat, 10/29/2011 - 09:10 | 1824053 topcallingtroll
topcallingtroll's picture

Hey what about me?

Sat, 10/29/2011 - 09:25 | 1824063 JW n FL
JW n FL's picture



I am sorry fine Sir.. you simply have to, too many people that know and respect you.. to be considered any kind of serious Troll!

But if is make you feel better..


Bla! BLA! BLA!!! fuck you! cock sucker!! asshole!! mother fucker!!

Sat, 10/29/2011 - 10:06 | 1824105 Hephasteus
Hephasteus's picture

"Hey what about me?"

When the 99 percent decide to train your mom. I'm joining.

Oh sorry thought you were asking for trolling tips.

Sat, 10/29/2011 - 12:01 | 1824236 JW n FL
JW n FL's picture!

yeah... ummm you are not even close to a troll even when you try to stir the pot.. the quality of your fiber.. just bleeds thru and the edge needed to cut.. is dulled by your wit and grace, sorry bro!

Sat, 10/29/2011 - 13:25 | 1824416 JW n FL
JW n FL's picture



As 16 police officers were arraigned at State Supreme Court in the Bronx, incensed colleagues organized by their union cursed and taunted prosecutors and investigators, chanting “Down with the D.A.” and “Ray Kelly, hypocrite.”

Sat, 10/29/2011 - 13:26 | 1824417 JW n FL
JW n FL's picture

Occupy Phoenix Veterans with AR 15s keeping the Occupation Safe!


Sat, 10/29/2011 - 13:27 | 1824426 JW n FL
Sun, 10/30/2011 - 01:38 | 1825804 Hephasteus
Hephasteus's picture

I know there will be jewish hero's before it's all over. Just like there were hero's who protected them in times past.

Speaking of holocausts.

Germany is burning battlefield 3 disks in fireplaces and ovens. Plastering their news with details of it's spyware programs. Signing petitions for legal action.

Forcing amazon to take back 90,000 euros worth of opened illegal software (so far).

It's another german lolocaust.

NWO spokesmen for Electronic Farts reportedly said.

Damn Germany!!!, You scary!!!

Sat, 10/29/2011 - 01:41 | 1823810 buyingsterling
buyingsterling's picture

"Someone said that Americans are just a bunch of stupid animals easy to manipulate and subdue."

I think that 'someone' was Wanklord, in his last post.

Sun, 10/30/2011 - 01:40 | 1825807 Vlad Tepid
Vlad Tepid's picture

Last 85 posts.

Fri, 10/28/2011 - 21:51 | 1823387 chubbar
chubbar's picture

You really going with the idea it's the fault of a whole generation? Really?

I was 13 when the 70's hit, making $1.80/hr washing dishes part time after school. I missed the whole "fee love" 60's. Primarily because my mom wouldn't let me out after 8pm and of course I hadn't hit puberty yet.

I served 6 years in the military, although there wasn't a war on and no draft. So I guess I served my country, given what was going on at the time in the world.

Not sure why you would feel that I'm your enemy or that I had any more say on what is going on in this country than you do.

What are you going to say to the guy who takes your position against your generation in 20 years? That you railed vociferously against the unfairness of it all on a blog? Threw some rocks at the police? Just wondering how you figure you personally are going to change the world because I couldn't figure out one friggin thing that I could have done that would have made a significant difference on my end. Good luck though.

Fri, 10/28/2011 - 21:59 | 1823411 Reese Bobby
Reese Bobby's picture

This guy has chunks of wanklord in his stool...

Fri, 10/28/2011 - 22:08 | 1823428 Pure Evil
Pure Evil's picture

I thought military vetrans only chewed nails and shit rivets.

If he's got chunks of wanklord in his stool, he better make an appointment with Dr. Assy McGee.


Dr. Assy Mcgee

Sat, 10/29/2011 - 19:59 | 1825320 Seer
Seer's picture

Your post could just as well been written my me.  Ditto all around: I technically only served 4 years USMC (though 2 were call-back years at the end).

Continually blaming others doesn't get us up the ladder of evolution.  That next rung relies on us being adults and figuring out how we're going to manage to live on a finite planet without killing ourselves: sorry techno-NASA-heads and religious head-bangers, but you're stuck here in the real world, if you don't like it then please make way for the rest of us who don't suffer from fantasies.

Fri, 10/28/2011 - 21:52 | 1823392 Reese Bobby
Reese Bobby's picture

The government is the credit drug dealer genius.  The blame lies with the vote buying welfare system.  The "baby boomers" are mainly beneficiaries.  The failed Christian in me thinks you are a stupid fuck.

Fri, 10/28/2011 - 21:58 | 1823409 sun tzu
sun tzu's picture

The elites use the poor, unions, and government bureaucrats as a battering ram against the middle class. 

Fri, 10/28/2011 - 22:05 | 1823417 Reese Bobby
Reese Bobby's picture

True.  The best enslavement is disguised as "generosity."  P.S.  Your avatar is a little disturbing, man...

Sat, 10/29/2011 - 13:26 | 1824422 unerman
unerman's picture

Homophobic simpleton? Me thinks so.

Fri, 10/28/2011 - 23:02 | 1823574 cynicalskeptic
cynicalskeptic's picture

No... the 'elites' promote conflict among the rest to keep them distracted; otherwise the guillotines would be running non-stop.  


The 'Tea Partiers' disgusted with 'government' SHOULD be more disgusted with the elites pulling government strings (and funding their own group).  How did anger with banks get morphed into tax cuts for millionaires?  (good job by the Koch Brothers). #OWS would not have happened if Obama had even tried to hold people accountable for the mess they created instead of continuing the Bush bailouts.  Both the right and left are fed up and furious - and are starting to catch on as to who's screwing them.  BOTH political parties in the US are owned by their largest contributers and serve THEM, not the people.  But the people have caught on.

The problem is that the elites got TOO greedy. You have to leave some crumbs on the table and keep people busy so they don't realize how bad off they really are.  When the rest of the population is hungry and unemployed, things get ugly.  Economically driven revolutions happen when people are desperate and feel that government no longer cares about them - that government itself is corrupt and serves only the elites.  Such revolutions do not end well - France in 1789, Russia in 1917, the current Arab Springs......   

Those that brought down the world's financial system - and who are looking to have the masses make good THEIR losses - will not find shelter when the whole world is calling for their heads.

Sat, 10/29/2011 - 13:30 | 1824431 unerman
unerman's picture

Exactly. Still too many simpletons here, blaming the liberal commie democrats or the right wing fascist republicans.

Both parties work for the same small group of people, and the odds tell me it is not you, it is not us.

Sat, 10/29/2011 - 12:08 | 1824254 upWising
upWising's picture

To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.

-Sun Tzu, the Art of War


Fri, 10/28/2011 - 21:56 | 1823402 I think I need ...
I think I need to buy a gun's picture

gold rush season 2 discovery channel......

Fri, 10/28/2011 - 23:46 | 1823649 Snidley Whipsnae
Snidley Whipsnae's picture

"gold rush season 2 discovery channel"

Anyone considering mining stocks should not miss this one.

It should be titiled "How Not To Operate A Gold Mine"...or "How To Dig Some Big Ass Holes In The Ground"

If they had invested the $275K that they started with in physical gold they would be way ahead.

Sat, 10/29/2011 - 11:45 | 1824206 trav7777
trav7777's picture's not a show about gold mining.  You can watch those on History or Science.  They are very boring.  The people are all geologists and serious businessmen.

Gold Rush is a reality show with a bunch of tools who do stupid shit and fight, so you can laugh at them and gasp at the trainwreck that they jointly and severally are.

If YOU were an "investor" like that Texas guy bullion dealer supposedly is...would you in ANY WAY invest in these idiots after seeing how much gold they pulled out in season 1?  After seeing how utterly laughable they were?  Of course not.  The whole thing is backstopped by Discovery.

I mean, you can read all these boring reports on ore grade studies and geosurveying from real gold miners, the high-beta juniors operating in Brazil or Ghana or lots of places.  These guys were trying to get onto some piece of land in Yukon and didn't even get a water permit.

The show should be renamed "Watch idiots dig big holes and wreck shit"

Fri, 10/28/2011 - 22:06 | 1823422 Kina
Kina's picture

focused all of their deprived intellect in experimenting with all types of drugs and having very promiscuous sexual lives.

And loving it.


But wait, I'm a baby boomer. Own my home, no debt, saved cash, PMs, food. And self funded superannuation fund. Though I am Aussie not American.


Just wondering if this baby boomer thing is more myth than truth. Maybe it was an era of prosperity squandered by TPTB.. the continuing rise of the banksters and military industrial estate.


Sat, 10/29/2011 - 07:55 | 1824003 Waterfallsparkles
Waterfallsparkles's picture

I think Boomers paid more than their fair share in taxes to the Government.  The problem the Government is having now is that most of the Boomers are Retiring and are not sending Trillions into the Government coffers thru Taxes.  So, the Governments income base has shrunk.  No more Government spending on the Boomers backs.

Now the Government spending is at its all time high and huge Boomer population is Retiring and not paying taxes into the Government to pay for it.

Sat, 10/29/2011 - 20:36 | 1825385 Seer
Seer's picture

The PROBLEM, the elephant in the room, is that growth has stopped.  Growth was feeder of the Ponzi.

The increase in govt spending (federal, local govts are hacking) is primarily due to a transfer of debt from the private sector financial system to the general public/tax payers.  The linkage of the financial sector and the (federal) govt is nearly invisible, making the two seem as one.

Fri, 10/28/2011 - 22:50 | 1823439 High Plains Drifter
High Plains Drifter's picture

look asshole.  i paid into ss for over 40 years. i want my frickin money these american gen x and gen y crybabies need to get their asses out and get work. that is the way we roll.... i am going to get what's coming to me, and that is all there is to it........

Fri, 10/28/2011 - 22:53 | 1823559 Idiot Savant
Idiot Savant's picture

I'm sick and tired of hearing social security called an entitlement program. I suppose for some it is, but most of us have paid into it since our first day of work. SS is only a hot button issue because it's no longer running a surplus and the government is having to pay back what it's stolen. I suppose the fair and equitable solution is to cancel the program and give everyone a full refund, with interest. Agreed?

Fri, 10/28/2011 - 23:40 | 1823634 seek
seek's picture

Cancellation with a refund would make it not an entitlement, and I'd be totally on-board with that. Arguably, however, that'd be a significant theft of money, given that inflation seriously devalues what you put it v. take out.

That said, it's very much and entitlement program when the amount extracted from it is generally far more than paid in; correct that and it's not an entitlement anymore.

The only viable method of fixing this is cutting benefits to match what's paid in. As soon as you talk cutting SS benefits, you're dead meat politically, because it's free money to an entitled class that hasn't paid in anywhere near what it's taking out, and they won't give it up easily.

The system is so hopelessly fucked the only way out is for it to blow up. If someone offered me an out (I'm in my mid-40s) of the gov't keeping everything I've paid in, and my never collecting SS, but not having to give them another dime, I'd jump at it. Shit, I'd jump at it even if I had to pay a 50K fee to get out, I'd still be ahead.


Sat, 10/29/2011 - 08:10 | 1824009 Waterfallsparkles
Waterfallsparkles's picture

The problem is that when you contributed to SS the Dollar was worth a lot more.  40 years ago $10,000. a year was a top level Management Position.  Today that same position would pay $150,000. a year.

Interesting how now everyone wants to pick on total contributions, yet they fail to realize that the contributions were made when the Dollar was worth more.

If you bought a $10,000. House 50 years ago it would be worth around $400,000. today.  Don't you wish you could go back in time and buy Real Estate today for the price it was 50 years ago.

The problem is the Government miss managed the SS Trust Money  and instead of properly investing it the took the Money and left worthless IOU's.

Sat, 10/29/2011 - 21:41 | 1825483 Seer
Seer's picture

So, proper management is for everyone to "invest?"

Your comments SOUND good, but they fail because the problem isn't that anything was "mismanaged" (which is usually a convenient term for the "opposition" to swoop in and be the "same as the old boss").  THE PROBLEM is that investments expect, nigh, DEMAND, a return.  Imagine if everyone demanded to have a return on wealth just from wealth!  Can people not see that this is totally impossible?  Clearly, energy (labor) and resources create "wealth."  As these things diminish, labor due to demographics, the rest -resources- are of a finite planet, the entire paradigm stalls out.  I argue, therefore, that mismanagement was NEVER the CAUSE, mismanagement could ONLY affect the timing, as the systemic failure was built-in from the beginning.

It's the forest, not the trees...

Fri, 10/28/2011 - 23:46 | 1823650 Libertarian777
Libertarian777's picture

what interest rate do you propose?

if you paid in $300,000 over your life into Social Security and claim $450,000 in benefits, where is that magical $150,000 difference coming from? It sure as hell isn't coming from the government making iPads at a profit.

The US Treasuries the 'assets' of the SSI fund are 'invested' in do not produce a return. Nominally they have a coupon, but does the government actually produce anything of value? The answer is no. And if the government produces nothing of value, how could your investment grow by 50%? It can't. They can only entitle you to the higher amount by taxing other people.

THAT is why its called an entitlement.

Social Security was intended exactly for what its called... INSURANCE. Insurance for those who lived beyond the expected mean life expectancy (65 back when SSI was started). It was not meant as an income stream to replace retiring before you died.

Your car insurance sure as hell doesn't pay you an annuity at the end of the 'expected life' of your car.

Remember its a ponzi scheme, those who got out first got their full benefit. There aren't enough assets to give everyone left a full refund.

Sat, 10/29/2011 - 09:31 | 1824068 JW n FL
JW n FL's picture



Social Security is 7% (when the economy is horrble, like now) of GDP..

and when I say Social Security.. I Mean ALL! Social Welfare Programs.

so.. if ALL Social Welfare Programs are only 7% of GDP?? where does all the money go?

Wall Street is getting 4 times PLUS! More Money that the U.S. Military that is fighting wars on many fronts..

and the real issue.. is!!

everytime a slow down occurs the claw backs ensue.. and those clawbacks.. when the economy is running full steam equate to many times the tax savings that they equate to when the economy has slowed..

so, who would want a slow down?

why is it in someone's best interests..



Sat, 10/29/2011 - 21:53 | 1825499 Seer
Seer's picture

"Wall Street is getting 4 times PLUS! More Money that the U.S. Military that is fighting wars on many fronts.."

I think that you're missing the point that it's all one and the same.  Read War Is A Racket.

Oh, and technically, the US cannot be fighting "wars," as the US Congress has NOT declared a war since WWII.

Sat, 10/29/2011 - 09:38 | 1824079 Landrew
Landrew's picture

Responding to you would take some time! I would need to teach you a math class first. The only person that would use your math skills is a Cock Brothers Troll.

Sat, 10/29/2011 - 11:41 | 1824200 infinity8
infinity8's picture

Too many people fail to understand that the amount of SS that someone receives after retirement is directly related to how much they worked and paid in (depends on income) and there is a VAST difference in monthly checks. Someone may have worked 50 years but if they were lower income there check is squat - certainly not enough to live on. Hence spousal benefits since Mommy used to stay home and didn't earn an income. And that Medicare is totallly separate and NOT free - the current monthly premium for most people is about $108.00 for basic Medicare that covers 80% of covered medical and that doesn't include Rx coverage, also separate, premiums vary. There are state programs that will cover the premiums for low income individuals because once someone is Medicare eligible, it's much cheaper for the state to do that vs. have them on Medicaid. SS disability is a whole 'nother can of worms and horribly abused and a topic for another day.

Fri, 10/28/2011 - 23:50 | 1823659 i-dog
i-dog's picture

Make up your mind! If it's not an entitlement program, then it's an investment fund ... which has been looted, mismanaged and otherwise destroyed. So, you'll probably get back what Bernie Madoff's investors got back ... zilch!

Sat, 10/29/2011 - 07:55 | 1824002 RKDS
RKDS's picture

The negative connotation constantly smeared over the word "entitlement" is so Orwellian it's scary.

Sat, 10/29/2011 - 09:17 | 1824058 topcallingtroll
topcallingtroll's picture

Yeah they will have to change the word again to fool people.

Welfare merely became "transitional assistance" as they transitioned welfare recipients to disability so they could claim they ended welfare.

Sat, 10/29/2011 - 13:36 | 1824448 unerman
unerman's picture

The problem is your government squandered it.

In my country, it was reformed years ago so that SS funds are kept separate from general funds and cannot be spent on government. It is invested, relatively safely, so it also has the benefit of some growth.

You are fucking right you are entitled to that money. It is yours.

Sat, 10/29/2011 - 22:04 | 1825510 Seer
Seer's picture

"It is invested, relatively safely,"

WTF?  Is it or isn't it SAFE?  And, if your govt's sovereign funds collapses (as seems is happening for most, and if not now, then ABSOLUTELY in the future)?

"Relatively," that suggests that you're no more positive than anyone else (merely that you'd like to THINK so).

EVERYTHING IS A PONZI because NOTHING can continue forever!  And in the shorter term it's the world's economic system that hemorrhages due to an inability to sustain its growth projections, projections that are NOT based on physical reality!

Rather than act like grownups and admit that everything is based on fantasy we harp on and on about stupid shit like "social security," that MY "funds" are or aren't better protected in THE GREAT PONZI.  Welcome to the glue factory, horses asses...

Sat, 10/29/2011 - 00:36 | 1823730 cranky-old-geezer
cranky-old-geezer's picture



i am going to get what's coming to me, and that is all there is to it........

You'll get what congress decides to give you at that time, and those dollars won't be worth 1/4 of the dollars you paid in.

Debasing the currency is the biggest way government steals from you, beyond taxes.


Sat, 10/29/2011 - 08:14 | 1824013 nmewn
nmewn's picture

"You'll get what congress decides to give you at that time, and those dollars won't be worth 1/4 of the dollars you paid in."

Which brings up another point on "fairness".

Congress & bureaucrats should have no better "entitlements" or benefits than the public at large.

Clawback Amendment.

Sat, 10/29/2011 - 03:05 | 1823878 d_senti
d_senti's picture

I hear this issue come up a lot, with great division between bloners and my generation. I think we can all agree that us twenty-something's will never see a dime of SS, at least not in dollars with any value. Similarly, boomers did pay into it and should get their money back.

But here's the problem: they already spent your money. When older people get SS, it's the money collected from the young (who will never see it again) and given to the old. You were robbed by the government. They took your money and spent it. It's gone.

So now you want them to rob me too, so that you get paid back. How is that right? THEY stole your money and spent it, but now you want them to rob US so you can break even?

I sympathize. I really do. And if I were you I'd be pissed (I'm pissed anyway but for other reasons). But you have to accept it.

Sat, 10/29/2011 - 04:04 | 1823892 i-dog
i-dog's picture

Spot on! The 'New Deal' (and what a 'deal'!) ponzi scheme was first started by FDR - 15 years before the boomers were born - then extended by LBJ with his 'Great Society' (what a 'great' plan!) while the boomers were still in college. The whole scheme went bankrupt (again!) in 1971 - just as the boomers were starting to bring home their first paychecks and start families.

The first boomer president was Slick Willy in 1993 (by which time the ponzi was already 60 years old and had bankrupted the country once; all presidents prior to him were of the WWI or WWII generation) ... so the boomers had nothing to do with creating the ponzi mess - even though they continued voting for it and benefiting from it (as did their parents and their children).

When a ponzi goes bankrupt, all current investors lose everything they put in (apart from a few cents on the dollar upon liquidation). We need to end the ponzi right now, and every living generation needs to live with the consequences.

The 'divide and conquer' bullshit also has to cease.

A boomer

Sat, 10/29/2011 - 22:18 | 1825532 Seer
Seer's picture

Nice shot at subliminally chastising ONE political party.  But, to get on with FACTS...

How can ANY system that's based on interest, on GROWTH, NOT be a PONZI when it operates on a finite planet?

You all sound just like the Bolsheviks.  "If we can take over power then everything will be corrected."  You're going to get your hands on the same fucking levers of power and do the very same fucking thing.  The SYSTEM controls you!  That's the issue to contend with.  Getting CLOSER to it will NOT make things better.  Oh, but all the idealists here will clamor on and on about how if only the "real" thing could get a chance, blah, blah, blah...  The chance was there and it FAILED in the REAL world.  Rather than admit the failure everyone blames everyone/everything else, always failing to note the fatal built-in flaw of being based on perpetual growth on a finite planet.

It's totally laughable that people would think that capitalism wouldn't result in oligarchy.

Sat, 10/29/2011 - 07:14 | 1823985 Tao 4 the Show
Tao 4 the Show's picture

How refreshing to hear a young person who thinks for him/her self. Generational skirmishes are far worse than useless. Whether anyone likes it or not, us 99% are in the same boat regardless of age.

If someone breaks into your house, you can take a baseball bat or something worse and both stop them and let them know your displeasure. Now, however, the bankers/PTB can take everything we own without us ever seeing their face or even knowing who is really pulling the strings.

If someone has you by the cajones you are at risk of both pain and loss of future procreation. If they have you by the throat, your life is at risk. How much worse if they have both everything you have earned and saved, your potential to earn more, and your children's future? Indeed, even life is at risk as people struggle to feed themselves and face grinding depression.

We are all living in a wealthy period of time that is coming to an end. The boomers were largely placed in the peak of it, but both the generation before and those after have enjoyed the fruits of it in one degree or another. As the good times fade into history, it will only be those who can face the current reality who make a positive difference. The rest will be clinging to anger, expectations, etc as the ship goes down.

We are all going to be feeling our way through the next 10 or more years as massive changes take place. Some boomers gave all they could to making the world a decent place while others only partied. The same can be said about the generation before and the younger ones.

The only real question is how we all handle NOW. The rest is crybaby BS from those who are being exactly what they are criticizing.

Sat, 10/29/2011 - 09:36 | 1824076 SamAdams1234
SamAdams1234's picture

476 AD baby.... Tommorrow Aldric.

Sat, 10/29/2011 - 14:20 | 1824494 akak
akak's picture

Alaric came much earlier (at the sack of Rome in 410) --- it was the Lombard chief Odoacer who deposed the last nominal Roman emperor, Romulus Augustulus, in 476, by which time the Western Roman Empire existed largely in name only.

It is interesting, and ironic, to note that the last emperors of both the Western and the Eastern Roman Empires had the same name as their respective founders.

Sat, 10/29/2011 - 22:29 | 1825554 Seer
Seer's picture

It's amazing to see the powers of the controlling elite permeate the debate.  Always it's about dividing us.

I believe that you are part of the future, you understand.  I'd further state that TPTB, the "They/Them" (1%ers?) are basically "us" as well.  However, they are only "us" in a manner of being human, but still they should be treated humanely.

I see it as a matter of going in the "right" direction and letting the rest take care of itself.  The "1%" (sorry to co-opt this, but I'm kind of tired of "TPTB") can't really exist without the rest of us, while we, on the other hand, can, have, and always will be able to live without them (  Rather than following them (and their failed systems) we need to forgo spending precious energy on them, on trying to "convert" or prosecute them (they own the laws, the courts, they will NOT use them on themselves!), and instead use that energy to create a meaningful life/world.  No Gods, no Masters- go forth!

Sat, 10/29/2011 - 13:39 | 1824451 unerman
unerman's picture

Spot on. Good point.

Sat, 10/29/2011 - 10:54 | 1824147 mfoste1
mfoste1's picture

ok i really dont know why you are trying to blame a younger generation. People would work if there were jobs, however the employment situation in the US has deteriorated significantly due to monetary and fiscal policy decisions along with corrupt political moves. So you should think about who would be to blame if you dont get your SS, because i can assure you that the problem does not lie in gen X, Y. So while you're complaining about them, in the meanwhile you will have accomplished nothing to correct the true problem.

Sat, 10/29/2011 - 12:31 | 1824299 DavidAKZ
DavidAKZ's picture

There are not enough x and y's to fund your retirement.It's a Ponzi scheme remember ?

Fri, 10/28/2011 - 22:41 | 1823440 High Plains Drifter
High Plains Drifter's picture


Fri, 10/28/2011 - 22:14 | 1823445 earleflorida
earleflorida's picture

it was the greatest score in u.s. history - post wwii [1950-1970] , and then we blew it - but not for reasons that you espouse -

our manufacturing became complacent and qc went down the drain when the rest of the world was still trying to get their house in order - ref: "the deming circle",... once most post wwii countries were back on-line competition increased as we mired ourselves in a false sense of security -

arrogance, hubris, or narcissism was our 'achilles heel' as we became a throw away society and felt the world was our oyster forever served on sovereign countries misfortune if they didn't toe-the-line with our military might[?] -

we produced junk and lived off our laurels - all generations to blame,... until reality set in, with a nafta/ cafta/ wto/gatt , masked as a "Trojan Horse" that turned our fantasy world upside down,... with 'alittle[?] hole-lotta-help-from-the-frb'!!! 

always, and forever, from a friendly, ever accommodating, "Hole-Lotta-Help-'Federal Reserve Banking System"

thankyou tyler 

Fri, 10/28/2011 - 22:25 | 1823475 High Plains Drifter
High Plains Drifter's picture

i used to love those american made (yes american made ) stereo systems. they were made in america and were very high quality, then came the made in japan crap and the rest is hisss tow   ree.......

Sat, 10/29/2011 - 06:10 | 1823944 malikai
malikai's picture

...and now the best stereos in the world are made in Japan. Strange how that works.

Sat, 10/29/2011 - 08:09 | 1824008 Freebird
Freebird's picture

One word - Nakamishi

Sun, 10/30/2011 - 01:45 | 1825814 Vlad Tepid
Vlad Tepid's picture


Sat, 10/29/2011 - 11:05 | 1824162 boiltherich
boiltherich's picture

Blaupunkt, Philips, Clearaudio, ever heard of those?  Europeans make some good stuff too, in fact I drive a BMW because I found it be simply the best quality, best engineered mass production car there is.  American cars are plastic junk, Korean cars are getting better but still not there yet, Japanese cars I just don't like, they are ugly and not made for people with longer lanky bodies like I have, I am never comfortable in them.  Bavarian cars are made for the roads around this region, winding, mountainous, often wet. 

When I ask myself why we sold out our manufacturing base, why we can't seem to produce such labels with distinction like we used to, I note that all those nations who took over such industry are mercantilists.  All of our major manufacturers evolved into financial companies, the three largest names in US manufacturing long ago became the three largest issuers of commercial paper and made so much of their profit from finance that their making of goods simply could not compete.  Ford, GM, and GE together dominated the commercial paper market, and in part this was why the massive bailouts were not a question of should we but how fast can we do it.  When Lehman collapsed the commercial paper market froze, had they not done what they did on the day they did it all three companies and others as well would have died. 

And I do remember when Made in Japan meant shoddy, would break the second time you used it, emphasis on cheap, what we call crap from China today.  The figured out real soon that QC and good engineering were the answer and soon dominated every product line they entered, already in the seventies they ended TV manufacture in the US.  Zenith was the last hold out but just could not compete, though it was price and manipulated yen that killed them. 

Maybe losing reserve currency status will be a good thing for us, we still make some market dominating goods and untethered to a reserve currency we might be able to make a lot more.  US nameplates seen all over the world include Ford, light trucks and vans, tractors, John Deere, Caterpillar, GE for jet engines and turbines, but most of our exports are either Ag products, or parts like capital goods and machine tools that if they have a label at all tend to get hidden after installation. 

As of last year China was the largest exporter at 1.2 trillion, then Germany at 1.12 trillion, then the USA at 1.05 trillion, next was Japan at 581 billion.  So you see it is virtually a three way tie for top spot with Japan half that of America.  We could double our take on the same goods shipped if only we could dump reserve status.  But then we would be accused and loathed and hated globally for being greedy mercantilists which it was OK when Japan, Korea, China, Germany, Holland, and India do it, the moment we do it we are the scum of the earth and they will start flying jets into our cities taller buildings. 

Sat, 10/29/2011 - 11:51 | 1824215 trav7777
trav7777's picture

Jap made stuff was never really that crappy...maybe in the fkin 50s. When the CVCC came out, it pretty much took over the market

Sun, 10/30/2011 - 01:49 | 1825819 Vlad Tepid
Vlad Tepid's picture

The real game changer was W.E. Deming.  The US wasn't interested in what he was selling...Japan took it and became a superpower.  It took the US until the 80s when the Japanese had a tanto to the automotive industry's collective throat to even bother to look into Deming's methods.

Sat, 10/29/2011 - 23:55 | 1825659 Seer
Seer's picture

1970 - HELLO!

1) Off the gold standard;

2) Peak US oil production.

#2 demanded #1!  The US was broke, it DEFAULTED in 1970.  And since 1970 the DRIVER of the world's economy -OIL- was no longer the driver of the US economy.

Sorry, but brains don't create wealth (although the financial institutions wanted us to believe so, and, frankly, they kept our asses out of the ranks of the third world via their hocus pocus BS).  Wealth ALWAYS comes from resources: wars aren't fought over for petty reasons (only petty minds can view such), they're fought over for resources.  Now consider "labor."  Labor = work.  Work makes things HAPPEN.  And oil represents the greatest source of potential work (one that's readily usable): and boy do I see this every time I operate my tractor!  Given that the US's huge trade deficit is largely due to energy the importance of #2 should be quite clear.

But, folks who are hanging out up in the air (not grounded on the earth) tend to overlook the physical limitations and offer up ideological views, views which can never coexist with the real physical world (though many will say it's because of hubris or some other excuse).

Fri, 10/28/2011 - 22:31 | 1823488 Freddie
Freddie's picture

They elected a muslim destroyer and are brainwashed by his TV and newsmedia plus hollywood.  The Matrix and the idiots enjoy the brainwashing in HD 1080.

Sat, 10/29/2011 - 03:09 | 1823880 Michael
Michael's picture

When the wealthy elite make the laws in their favor to pillage the entire wealth of the people, it has an adverse affect that manifests itself in many ways.

It doesn't make sense to blame the victim for the way they compensate for their ass rapings. 

Sat, 10/29/2011 - 09:01 | 1824048 Fred C Dobbs
Fred C Dobbs's picture

Wanklord, you belong elsewhere.  



Sat, 10/29/2011 - 09:14 | 1824055 cowdiddly
cowdiddly's picture

Well in all fairness. I don't use drugs but I do like a little Poonanny now and again. I guess with a name like Wank Lord you would not understand.

Sat, 10/29/2011 - 11:06 | 1824163 Raging Debate
Raging Debate's picture

Exactly. Beatles come to mind: 'But if you got pictures of German Mao, aint gonna make it with anyone anyhow.'

Sat, 10/29/2011 - 09:36 | 1824074 oldman
oldman's picture

Come on now, Wank,

Who began mailing me one offer per week to open a credit card account from 1962 to----- ?

Was there any great political demand, any strikes, any request from the 'Americans', as you refer to us, for credit?

It was free money. What did anyone know about managing credit? We were accustomed to paying cash from our daily/ weekly pay for EVERYTHING! And here these dumb banks invite us to borrow today for a hamburger and pay tomorrow-----who is going to refuse 'such a deal'?

Fast forward twenty-five years and they offer us upscale houses that are way beyond our common dreams--------who is going to refuse? Cars, furniture, clothes, undreamt of vacations, education, health care---all of the miracles of this modern madness----who is going to say no?

And when demand is sated and we are all full of our needs and MUCH MORE------the credit card offers and advertising hype is doubled, then quaddrupled to maintain consumption.

We were guilty of being human----no more than this. We were managed by a very sophisticated machine just to fuel the growing greed of the geniuses at the banks and in the government.

That's us---the 'Americans'---the 99%.

What was the 1% thinking of---that we would ever have the capacity to pay them back as they sent the jobs and 'union problems' overseas?

Shit just happens, pal----and don't look around too severely because it is happening all over the globe----everyone is in the deal because all you have to do is to 'borrow' a few chips and deal the cards.

Keep that smile on your face----this is going to get VERY interesting!

ciao from 'old Europe'            your friend  om

Sat, 10/29/2011 - 12:05 | 1824245 trav7777
trav7777's picture

yeah and why should you have said no?  You can't take the vacations when ur dead

Sat, 10/29/2011 - 18:54 | 1825204 oldman
oldman's picture

Four 7's,

You are a philosopher par excellance.

My grandfather could not have said it any better             thanks      om

Sun, 10/30/2011 - 01:10 | 1825770 Seer
Seer's picture

With each passing day the diabolical nature of Edward Bernays becomes clearer...

Sat, 10/29/2011 - 11:03 | 1824144 epwpixieq-1
epwpixieq-1's picture

The prosperity of the 50s and the 60s was brought by the European well educated in science workforce ( mostly from Germany ) who migrated to America from the ruined the WW2 Europa as well as the status of the dollar as reserve currency due to US being the second (non comunist ) player of the winners.

Which resource reach country will not prosper when injected with 5-10 million highly educated, several times over the average of the country, workforce. It is a HUGE transfer of wealth, although people do not realize that.


Sun, 10/30/2011 - 01:14 | 1825773 Seer
Seer's picture

The fact that the rest of the world's manufacturing was crushed following WWII, that the US oil exports garnered LOTS of income (now it has totally flipped), and that there was pent-up consumer demand with the US had nothing to do with the economic rise?

Sat, 10/29/2011 - 10:59 | 1824154 DosZap
DosZap's picture

Wanklord(aka Jerkoff)

 instead, they focused all of their deprived intellect in experimenting with all types of drugs and having very promiscuous sexual lives

To put all Boomers into the category you descibe is insane and bigoted.

But it's obvious you are ignorant (or an idiot to boot).

Go sit in a corner and Wank Off.

Sat, 10/29/2011 - 11:12 | 1824168 CalFord
CalFord's picture

Wanklord describes it perfectly.  I have lived first hand the life Wanklord complains about, its it quite accurate.  I would add that the "drugs" Wanklord speaks of is in reality not just illegal drugs, it is psychotropic drugs, investment bubbles, sports, celebrity affairs, etc. 

I find it most interesting that Wanklords comment has substantial votes against it.  What does this tell us class?  It tells us that even Zero Hedge readers are majority spoiled brats who do not want to face reality, that is, most of their investments are likely dying.  I suspect that BS media (Jim Cramer, etc) is the new "drug" these fools are hooked on. 



Sat, 10/29/2011 - 11:41 | 1824201 DosZap
DosZap's picture


I find it most interesting that Wanklords comment has substantial votes against it.  What does this tell us class?

Read my post to the ALL inclusive Wanker.

Some,most of the things you said we were,are involved in are called life.

You like football, baseball, soccer,golf,theater,movies, you like to have some form of diversion from working 40-80hrs a week?, it's called relaxing, and tuning out..........if you did not you go stir bat shit crazy.

Everyone LABORS to do the things they like to do (this is worldwide, unless your in a 3rd world shit hole).

Investments are dying because they were planning to kill them, this is all pre-planned,the fact that people invest at all tells you that people HAVE a plan, and are saving.Trying to earn a living and make  as much profit as possible.

Consumer debt did not get us here, the Fed and the Government did.

You morons act like enjying life, is a's not, it's to be lived.

Sat, 10/29/2011 - 12:22 | 1824283 CalFord
CalFord's picture


I do appreciate your feedback. 

I have relaxation time, and its all productive in one form or another (wood working, gardening, hiking, etc).  Sports is a wicked drug, a diversion from the real threats in life.  Rome perfected the methodology of distracting the minds and energy from the masses by using the arena.  Pick pockets use the same strategy.  Currently we have a crime the masses chose, desired, lust over - thus the masses deserve the price they pay. The spoiled American (and many other countries) literally earned their destruction. 

This comment I made addresses both of your points (1) sports is a form of relaxation and we all need relaxation.  (2) "they" are killing our investments -yes- with full consent of the victims.



Sat, 10/29/2011 - 12:04 | 1824231 defencev
defencev's picture

Bullshit. Most of the Americans live within its means. It is US government that does not. It shall and will be corrected. It is not that difficult: remove Bernanke.

Defeat Marxist Obama! And I am frankly sick and tired of the shameless propaganda of Gold. People who put all their eggs to this particular basket will find themselves totally broke. Young people should most and foremost invest into themselves not just in dead yellow metal. For older forks meaningful diversification makes much more sense. Intelligent people should be capable to control their desire to print money whenever they have a privilege to have an access to this process. Bernanke is apparently does not belong to this group and therefore should be removed. Marxists are not good presidents and the only thing they do is destroy  everything they touch. And therefore Obama should be defeated in next elections.

   The idea, that somehow Americans as a nation are total idiots and do not see what is going on (promoted by charlatans like Simon Black)  does not pass the reality test: we see a mass American movement to curtail an unsatiable government and that will be achieved during next elections.


Sat, 10/29/2011 - 12:06 | 1824249 trav7777
trav7777's picture

"lose," dumbass

Sat, 10/29/2011 - 14:36 | 1824558 akak
akak's picture

And I am frankly sick and tired of the shameless propaganda of Gold. People who put all their eggs to this particular basket will find themselves totally broke. Young people should most and foremost invest into themselves not just in dead yellow metal.

Please remove your head from your rectum, defencev.

For starters, it is IMPOSSIBLE to find oneself "totally broke" by holding gold, as its value can NEVER go to zero --- unlike many, if not most, of the paper assets that you presumably and naively would define as "meaningful diversification".

Secondly, gold is NOT an investment --- it is both money (that is safe from the depredations of government-induced depreciation) and a means to carry one's savings through a time of economic and monetary turmoil and collapse, as we are living in today.  Your specious and trite admonition to "diversify" in the face of the collapse of the monetary status-quo demonstrates that you completely fail to see the current upheaval for what it truly is: the death of the current financial and monetary paradigm.  I hope you enjoy watching your "diversified" paper portfolio depreciated away into oblivion over the next several years.

Sat, 10/29/2011 - 12:17 | 1824277 DavidAKZ
DavidAKZ's picture

What is the relationship between Baby Boomers and a $600T - $1Q unfunded credit derivatives bubble ?

Sat, 10/29/2011 - 14:31 | 1824549 FreedomGuy
FreedomGuy's picture

LOL! You're such a moron. Social Security started in the 1930's along with most the alphabet agencies in existence. Medicare and "The Great Society" and "The War on Poverty" started about 1966 before any boomers could vote. There were essentially no years without war from WWII to 1975, Vietnam as we tried to save the world from National Socialists, Soviet Socialists and militarists. We went off the gold standard in 1971 as only the oldest boomers could vote. It's the boomer parents who voted in everything else.

Then we brought in this fatal disease of stupidity from Europe. It was the collectivist-socialist welfare state where everyone was promised everything for little or nothing. Books didn't have to balance. Modern liberals go into noncompetitive fields like education and government where they infect new generations. The most important thing is to not think anything through. Just believe that there is an infinite amount of free stuff available. Sometime I will share the two principle rules of collectivism, but not now.

The nonthinking boomers keep raising taxes only to find we never ever keep up with the growth of government. They cannot make the connection between government and boom-bust economies, yet. Some do, like the Tea Party but most still do not. We keep trying this lefty stuff, thinking we are so smart that we can get a better result than Europe and all those who have tried it before. We won't.

So, the geniuses of Europe will go down first, like Greece, France, Spain, etc. dragging each other down. The United States will follow unless we change course. We have a half witted, wholesale leftist in charge of America now.

I agree with your grievance comment. The half-wits who believe in the god of government will find it doesn't really care. That's why they burn things in Greece and occupy parks in New York. Government feeds on power and the idiots who feed it more. Accruing power is all that the government god cares about. 

Keep wanking and practicing your bad history. Scapegoats are convenient.


Sat, 10/29/2011 - 15:10 | 1824599 ddtuttle
ddtuttle's picture

@wankerlord.  Holy Crap!

You are obviously upset about America's profigate materialism.  Well join the club.  However, your ideas about history a just plain wrong. 

The materialism we all disdain (but all participate in) began right after WW-II with the "greatest generation" that fought WW-II, the baby boomer's parents.  They were the ones who had to move to suburbia, buy an 8,000 lb car, run the ari conditioner with the doors open, and use credit cards for the first time and generally behave like heathens.  They won the war then had fun, so who cares.

The baby boomers as young people rebelled violently agsint such brazen materialism.  It began as rebellion agsint the Vietnam war, a war that NO ONE, not even Henry Kissnger, can explain.  But it rapidly evolved beyond just that  The main reason the 60's experienced a sexual revolution is because of the Pill, not some gigantic collapse of morals.  The Hippies may have taken a few too many drugs, but they also founded communes, began growing organic vegtables and generally started the concept of "going off the grid", although it wasn't called that.  In California in the 1060's there was a time you could actually buy your food, your clothes, and camp out without resorting to the mainsterm economy.

As it evovled, this counter culture pushed for civil rights for everyone, started the environmental movent, the Women's movement, and Gay movement and eventually stopped the Vietnam war.  As we got older we created the computer revolution, the internet, built the Hubble, the LHC bioengineering and countless other innovations.  (Disco was a mistake)  These movement were not anti-american radicalism, but a RETURN to real americanism that existed before the hyper-militarization of the WW-II generation.  You may disagree with these freedom enhancing movements, but the boomers wern't lazy: we worked hard and played hard.

Now, human nature being what it is, the boomers have drifted back into the materialism they ardently rejected as young people.  That's too bad.  But the real pods in this whole sytem are the young people who think they are entitled to everything.  Boomers were brought up by people who lived through the Depression, and were told endless stories about privation and frugality.  Thier kids are the real problem: spoiled beyond rotten? .... they were never ripe!

Ok, enough of "old guy telling young guy he's got it easy" crap.  Actually, we are all in this together, the 1% the 99%, the boomers, the gen-xers and even the millenials.  We have all lived high on the hog off the rest of the world through the dollar reserve currency.  The USA can and has printined as much money as we could even iagin spending to fuel the world's appetite for ever more credit.  However, we got to spend it first.  This was our legacy from winning WW-II and acutlally having made the world a better place.  During all this prosperity that came far too easily, which was at odds with the childhood sotries of The Depression, the boomers should have had that nagging sensation that this was all a little too easy and couldn't possibly last forever. That unease should have inspired us to be prudent and save some of our "too easily earned money".  If you were arrogant or stupid enough to believe you actually earned that money the hard way, that you deserved it, then you are fool and you will pay a severe price for being blind.

The USA's once in a millenium windfall from wininng WW-II, is just about up.  The old world order founded in 1944 at Bretton-Woods, has reached a pinnacle of unsustainability, and the world is rebelling against it.  Heck, Americans are rebelling against it!  But I would point out that the financial world is woven together like a cloth, the dollar cannot collapse without taking the whole world with it.  I would also point out we have NO IDEA what will replace the US dollar as the world's reserve.  The Euro? Please!  The pegged-to-the-dollar communist Yuan? No one would accept it.  The yen? <cough>NOT!</cough>  We have no alternative on the horizon.

I would suggest a 100% gold-backed currency for international trade that is recognized in every country as currency.  The each country can print its own currency that floats against that international gold-backed one (just like the dollar today).  Finally, we need to replace the Fractional Reserve system with something less dangerous.  If we can solve that, it will be the Boomer's great legacy to the world!  A functioning financial system.


Sat, 10/29/2011 - 19:41 | 1825261 oldman
oldman's picture


I agree with most of what you wrote, but you missed the biggest crime of the BBs: they all chose to be born at the same time!

This is what we are so concerned about---we never imagined a world with limited growth because of all of the limits we have broken through----there is just not enough for so few to pay so many even though they are in reality only funding their own futures.

Our generation is not a part of this---the money we paid into SSI was enough to fund our retirement even on a 3% roi and the inflation payment which we have not received for more than two years. Go back to the beginning and use the annual roi on the money held by SSI and I believe you will discover that what I write is true.

Also, remember that SSI was conceived in a time like we are in today as a minimum amount of money paid to old people like ourselves so that we would not have to beg or go hungry and we would be able to live out our lives respected for what we had contributed to the society during our 40 years of productivity. It is a noble concept that makes me proud of my country, if nothing else does.

No one then ever imagined that there would be private, public, and union pension plans, not to mention Keoughs, IRAs, and 401Ks-----I never worked for anyone that offered a pension plan nor had a paid holiday or day of sick leave, and---I'm not complaining. All I have as a source of funds to live on is what I was forced to pay into SSI----against my will. I am so pleased now that it was mandatory or else I would not be free of financial concern and a happy, free oldman.

Homes, gold and people are not to be sold.

Yeah, I think the problem of the BBs is that they all showed up at the same time----and whose fault was that?

Thanks for the inspiration       om


Sat, 10/29/2011 - 15:32 | 1824672 CaptA
CaptA's picture

This has to be at least the 6th thread I've seen Craplord cut and paste his or her nonsense in the last 3 weeks. Try getting original there, sparky.

Fri, 10/28/2011 - 21:54 | 1823397 westboundnup
westboundnup's picture

It's pronounced dolor.

Sat, 10/29/2011 - 06:15 | 1823948 FinHits
FinHits's picture

“The Rumors of my Death Have Been Greatly Exaggerated.” 
Mark Twain



Death by a thousand cuts From Wikipedia, the free encyclopedia

Death By A Thousand Cuts can refer to:

  • Slow slicing, a form of torture and execution originating from Imperial China


Sat, 10/29/2011 - 07:40 | 1823993 covert
covert's picture

like galaxies colliding. the next step is that when you need gold the most, it will be super illegal.


Sat, 10/29/2011 - 11:10 | 1824165 Calmyourself
Calmyourself's picture

The key is "much, much longer than most think"  There are no financial or law triggers that will be allowed to pop.  The only trigger is hunger as the American populace is dumbed down so far dancing with the stars scoring system is a reach for most of them..

Sat, 10/29/2011 - 11:53 | 1824217 peekcrackers
peekcrackers's picture

the slow death of the dollar

and a re-brith of PMs

Au Ag on the lunch pad ..

This ground control to major Tom ..can you hear me major tom?

Fri, 10/28/2011 - 21:23 | 1823337 dumpster
dumpster's picture

old news

jim dines called it 20 years ago

as did sinclair

these new guys just stating the obvious/

throw um a fish

Sat, 10/29/2011 - 01:43 | 1823814 buyingsterling
buyingsterling's picture

Here's some new news: Ron Paul's Fed chairman would be Jim Grant 2nd video down, at 12:00

Fri, 10/28/2011 - 22:09 | 1823342 DormRoom
DormRoom's picture

the end game is this:


runaway stagflation in developed countries. hyperinflation in BRICs.  The Feds can't increase interest rates to curtail stagflation because it would blow up their balance sheets, and make it difficult for the US to roll over its terminal debt.  So the US will likely be stuck in a vicious stagflationary trap for some time--until the  period of extreme global re-adjustment is over.


USD flows are too huge, and any adjustment in them, creates disproportionate shocks in the system.


With each injection of QE, the US pushes itself further into an economical quagmire.


The US cannot solve its domestic objectives, and sustain international economic stability, as long as it remains the reserve currency.  Paradoxically, if it no longer remains the reserve currency, the end result is the same: hyperstagflation, and hyperinflation, depending if you are BRICS, or not.  Also, if it withheld massive outflows of dollars to sustain global trade (in absolute real terms), global trade would collapsel, and the global economy would end up in a deflationary spiral.


The world had 30 years to resolve this imbalance.  They did nothing.  And now the adjustment will be extreme.  Thanks, Alan Greenspan.


There is no free lunch.  For 30 years the US has used up future demand, living on debt, like a global succubus. 

Thanks, Alan Greenspan.


Rage against the dying of the light


Lorenzo Bini Smaghi thoughts on the Triffin Dillema

Fri, 10/28/2011 - 22:50 | 1823553 earleflorida
earleflorida's picture

where does it say that the 'fed' can't raise rates?

when their back is to the wall {fill-n-the-blanks}, and guess who will follow the leader,...

Fri, 10/28/2011 - 23:53 | 1823664 seek
seek's picture

It's not an option to raise rates because of the amount of outstanding debt. Volker could do it to kill inflation back in the early 80s because the debt load was relatively small. Remember that at that time the US was paying double digit rates from '80-85, and nearly 15 percent in 1982.

Current US debt is $10T (that's the official number, the real one is bigger, but we'll use it.) At 80's era rates, that's 1.5T in interest per year alone. That's more than we take in income taxes every year, and about 65% of total revenue, including SS taxes.

Basically, raise rates and the government becomes instantaneously insolvent. You fix this by printing more debt, but since the carrying cost is more than revenue, that debt adds to the total debt burden. So you repeat the cycle, and it goes faster and faster and the money devalues as you print more and more.

There's a technical term for when this happens: hyperinflation. The economy collapses and the country ends within weeks/months of this cycle being initiated.


Sat, 10/29/2011 - 00:35 | 1823710 DormRoom
DormRoom's picture

There is a line of escape.  massive fiscal stimulus that puts money into unemployed workers, and productive public projects.  The only way the government could ensure this is by implementing a direct jobs program, and setting up a massive public bank, focused on infrastructure spending, and the real economy.  Wall Street doesn't care about the real economy.  They have a hard on for the shadow economy.   At the same time you have to jack up taxes from the 1% even more for the .01%, cut corporate loopholes. While cutting taxes to the middle class, and small to medium size businesses.


Yes, the massive fiscal stimulus would increase debt, but if you get a massive jump in wages, and national income is better distributed from a major tax overhaul, then the US may be able to arrange an orderly exit from reserve currency status.. maybe.


China would also have to let the yuan rise a fuck of lot faster.


Structural unemployment is a huge problem, but you can ony deal with that in the medium term.  How can we get people with high school diplomas to fill high skills/higher educational jobs in the short term?  you can't.  There's needs to be a parrallel path for this.


But this whole argument is moot.   A Republican majority will likely win  Congress, and the white house.  And if we get a tea party member for president--we are fucked--cuz half of them expect the end times soon; even looking forward to it.  So I doubt they would ever consider these 'tax and spend' ideas, regardless if they may solve the problem.


James Carvell should have said, "It's the real economy, stupid."


And yes, I realize that if the US fails at this gambit, it is game over.  And so is the world.  But the current trajectory is game over, so fuck it.  I'm young. bring it on.

Sat, 10/29/2011 - 00:56 | 1823758 seek
seek's picture

This really isn't a right/left thing now, and if it ever was, it isn't anymore. Yes, there are left/right players jockeying for position, as they always are, using whatever justification du jour they can. Being fucked knows no political party. You're right, it's game over. But it is even with what you propose.

As soon as you dig into the real numbers, even just a little bit, it becomes obvious this is not a solvable problem with anything remotely resembling the current world.

You can play with taxes as much as you wish, but even at the very peak during WWII, tax revenues were about 25% of GDP. They will never go above this, as it's a self-limiting cycle. This is a higher level than it is now, but the gains are small. US GDP is ~ 14T, 25% of this is 3.5T. Total federal spending (taking total Fed income, + deficit to compute it, not using claimed spending numbers) is also 3.5T. IE we've hit the point where 100% of maximum tax revenues will just cover spending, and no additional increases in spending. Add in the reality of actually getting to that magic 25% of GDP is slim, and there's interest to pay if rates move from zero, and it becomes clear that things won't work as they are now.

Oh, and all that's without state and local tax streams and spending added in, or debt and deficits.

It does not matter who is in congress or the white house with respect to the economy and financial situation of the country. We are fucked. There will either be a devaluation of the dollar (direct or indirect) or a default on the debt (direct or indirect through devaluation.) When this happens we will not be able to run a deficit at anywhere near the scale we are today, so massive portions of the government's spending will be cut involuntarily -- again, doesn't matter who's in the government running things. Our debt load is past the point of no return, any program that's based on more debt just speeds up the collapse, no matter how well intentioned it might be.

Pretty much the only thing that the elected ones may have a hand in determining is what comes next. If we go police state, or if we push power back to the states and scale back into something closer to a confederacy like the soviet collapse. But the financial implosion aspect of the US situation is inevitable, they're just tweaking things -- while they can -- to change the rate it happens at.

So it's game over. However, being young, on the back side of this thing will be amazing opportunity, like post WWII levels, and likely better than that. For those of us that are older, many will get the punishment earned by letting sociopaths get into power.

Sat, 10/29/2011 - 01:18 | 1823779 DormRoom
DormRoom's picture

yes, the effort will be Herculean, and likely a pyrrhic victory.  I have no illusions.    The question is not when it will end, but if the ending for the US will be orderly.


Like I said.  They had 30 years to tackle this imbalance.  Dem & Republicans ignored it.  Alan Greenspan let it happen, because he wanted to unlease the market from government regulation.  So we got financialization, and massive leverage.  Socializing  losses for banks, but the privatization of profit.


IMF didn't sound the alarm bells.

Institutions erected to protect the people, failed.

Simon Johnson speech:

Rage against the dying of the light


Sat, 10/29/2011 - 12:32 | 1824305 trav7777
trav7777's picture

China built an entire economy off the imbalance.  So did Germany.  I mean, who really was out there who DIDN'T note that the debts were unsustainable?  Assuming growth continued, everyone figured just run the game till it died.

It was a matter of cross that bridge when we get there.

Protect the people from WHAT, granite countertops and SUVs?  The "average" people who are bleating are idiots and had EVERY chance to fall into a hole and get rich these past 30 years.  Instead they lived the good life; they have nothing to complain about.

Sat, 10/29/2011 - 15:02 | 1824610 FreedomGuy
FreedomGuy's picture

The problem I have with this GDP versus national debt discussion is that is kind of assumes that the government has the whole economy and everyone's money at it's disposal and it does not. It sort of assumes government owns everything and can take anything it wants. I reject that even though statutorally it is probably true but would result in revolt.

The proper comparison is government revenue versus debt and obligations. We are far far worse off with those numbers.

Sat, 10/29/2011 - 19:38 | 1825275 oldman
oldman's picture


I'm sorry, we are NOT fucked; we just have to work it out and we will. Our expected lifespan will continue to drop, a few generations will have to work their asses off, but they will work it out.

Survival of society as it was has never worked, however------change is the only security nature knows.

Nice post though, thoughtful    thanks       om

Sat, 10/29/2011 - 11:17 | 1824173 Calmyourself
Calmyourself's picture

Dormroom your second to last last line is the most cognizant, " I'm young."  Yes, yes you are..  You may wish to consider what would happen if government spending were slashed 40% tomorrow everyone takes 40%..  Massive spending on public works gee I don't know has it ever been tried before and the results were??  That's right the results were the mess we currently find ourselves in the great Keynesian nightmare..


We ought to dig up Keynes and beat him with a rolled up copy of all Fabian socialists writings wrap him in the communist manifesto and drop him in the challenger deep..

Sat, 10/29/2011 - 11:42 | 1824203 Raging Debate
Raging Debate's picture

Hey kid. That needed to be done in 2008 and I advised Bush just that. But many other people did too, even Larry Summers. But listen, I got a tip for ya. Learn Indian and ME culture, simple history and customs of doing business. Not really any different just more courteaous and business done over home cooked meals and puffs of smoke.

They need tons of help on Social Media. Look up science and dimensions for models. Consider pyramid foundations, geometry and simple system designs. This shouldn't take you more than a week or 40 hrs of research. Then reach out to them about Social Media. Just go to your local Paki store and spark up some light conversation.

There is no reason to stand still in life even in these times. As someone already said, rage against the dying of the light. Even if it takes a few years you'll be burning brightly and that attracts people with capital.

The Central Bank system will evolve but it is worth you reading BIS and IMF sites so you can provide macro analysis to family or investors on keeping them safe and mitigating loss even while you gain.

Political Leadership needs to stop the Fascist games that run our world economy into a black hole. We're trying capitalism for real but the Fascists and Communists are saying no!

Sat, 10/29/2011 - 14:44 | 1824577 FreedomGuy
FreedomGuy's picture

You and your damned "infrastructure" bullshit. There isn't a highway or water system not under construction already anywhere in the U.S. They have contracts for the next decade!

Why is "infrastructure" more important than any other industry? Obama's idiot government jobs stimulus with cops, teachers and highway construction is idiotic (but politically expedient for votes). How about we build day spas and bookstores. No, we need more coffee shops and convenience stores, right? Wait, wait, wait! Let's just hire the entire unemployed and underemployed population and dig holes and refill them! It's all about wages and pumping up the economy?

In a free economy, money goes to productive enterprises, including making money losers productive and profitable. All government stimulus bills ignore this. If it were not so, then stupid enterprises like Solyndra would not get funded. There was over a half billion of stimulus! Now there are 1100 unemployed, an empty factory producing nothing and losses to the treasury/public. I am sure the Obama donors escaped with their money.

This is the lunacy of government investment. Government funds ethanol and corn-beef-food prices skyrocket. Good job, morons! Great if you're a fatcat subsidized corn growing farmer, but no one else.

In a free economy there is never ever a "game over", only in the centrally planned economies you advocate. If you are young maybe you will learn this. Do it before it's too late. 

Put down the damn central planning crack pipe and go to free market rehab!

Sat, 10/29/2011 - 14:58 | 1824601 akak
akak's picture

Nice response to a clueless statist, FreedomGuy!

This "dormroom" should get out of his more.

Sat, 10/29/2011 - 10:47 | 1824135 SamuelMaverick
SamuelMaverick's picture

current US debt is 14.5 trillion,  with more than 1.5 T added just this year.  We are past the point of no return, and the economy cannot grow its way out of this mess. If interest rates go up, the cost of servicing the debt will crush the Gov.  

Sat, 10/29/2011 - 14:45 | 1824580 FreedomGuy
FreedomGuy's picture

Sam, you've got it right. Short of a Ron Paul type $1trillion in one year cut, there is no economic path out. At best we go flat then start down again. It is the central point that eludes most of the political debates including the Republican debates.

Sat, 10/29/2011 - 19:00 | 1825144 earleflorida
earleflorida's picture

i agree somewhat,... but as an agnostic contrarian, i'm not totally convinced --

the fed is at near 0% rates, and the debt is skyrocketing - the only reason that the treasuries and bond are getting bids [terrible at that?] is for u.s. hegemony [military might?] -

please notice of late, that our GDP [hegemony] is starting to align gradually with certain [?] emerging market partners, and where calif., once, the 6th /7th largest GDP [state] in the world, has lost its ranking dramatically - in fact, i  wouldn't be a bit surprised if revised by a trustworthy, and seriously auditor , that the real numbers crunched,  would show that [rather than adding to past bs consensus data] 'REAL GDP numbers for the state would be significantly lower than stated by the CBO -

not to be out-done by total aggregate household value's, 'loss of equity' and 'REAL wage stagnation per household', that our GDP has actually lost 10% of its net total [fudgicle anyone?] asset value -

our hegemony is being compromised at this very moment in the EU with china buying their paper/swaps/etc.,  with payment & structure in yuan [repatriated to mainland] included in the ECB underwriting scheme -

we can't lower rates anymore - we can't have anymore QE's that prime the equity markets pumps only - while they [tbtf's & ws] offshore the free capital,... all the while turning the screws inward upon the u.s. citizenry, while simultaneously priming the pumps of prosperity outwardly onto the overly gratuitously chinese shores -

who's the currency manipulator anyway? -

JMO -- raise rates 50bp and let the chips fall - there's no inflation and enough capital already sloshing about to feed the inflation hawks a juicy  bone -

we re-purchase our own debt [as of lately?] anyway, so the modest int% hike won't kill us - it'll juice the  economy with people putting some money into CD's and other investment vehicles - people will keep on charging on the plastic, and spending anyway -  it's a trade-off that needs a much needed pragmatic, and tangible 'BETA', reality test/ check,... etc., etc., etc.,...-

there no where to go anymore - were  swimming at the bottom of an abyss  with the sharks amongst us, in this finite liquid-fiscal universe,... where the oxygen in the chilled liquid is nearly depleted [as is our dollar],  speaks volumes of no`mas [!], and time to cut-bait - yes, analogous to finding a new fishing hole using a different technique of fishing with different bait? 

Sat, 10/29/2011 - 00:14 | 1823692 BoNeSxxx
BoNeSxxx's picture

Spot on.  Spot on.

As a young kid traveling in foreign lands I was always amazed at how crummy their lives were... small kitchens, small bathrooms, no air conditioning, old furniture, no ice, etc... I couldn't figure out why things in the US were soooooo dramatically different -- it just didn't make sense on a gut level.

And I am not talking about third world shitholes either... I am talking about wealthy families in Asia and South America.  And, to a somewhat lesser extent, Europe.

Now we know why idiots in America sitting on their couches watching Dancing with the Stars live better than doctors in Thailand -- CREDIT.  30 years worth of credit and good will blown like a couple of Kentucky lottery winners...

Hail the Petrodollar /s

It was a good run... undeserved, iladvised, and foolhardy to be sure.  Now it's time to pay the piper.  The Emperor has no clothes and all that jazz.

Sat, 10/29/2011 - 12:31 | 1824297 Raging Debate
Raging Debate's picture

Bo - The debt party was global. China rose and our quality of life went down. But I am glad for the Chinese and I'll be more glad when we can balance global trade. It was a fun rocket party, but galactically stupid in hindsight. I have to admit if I was a Boomer in the 90's, knew we were just about at clinical immortality but just missed it by a fe decades I might have made similar decisions. And the global reserve currency does have the job of global policeman with it.

The last two decades was poor excuse for the way the military executed our externalization. But as empires go lets be fair. It was the most benevolent in history. Now the Internet is a giant mirror and mankind cannot lie to ourselves so easily to avoid real solutions. So be it, charge!

Sat, 10/29/2011 - 18:57 | 1825209 BoNeSxxx
BoNeSxxx's picture


Ultimately we will settle on a 'global' standard of living.  Or, China or the Ruskies will take over as global COP and enjoy a higher standard than the rest of the world.

One thing is certain: It ain't going to go over well with Joe Sixpack and Martha Marshmallow... Under any scenario I can envision, the Amerian standard of living is FUBAR.

Sat, 10/29/2011 - 09:44 | 1824065 falak pema
falak pema's picture

I agree with your anaysis.

Concerning this little excerpt on Lorenzo the magnificent; who single handedly did sink the Greek/Euro boat in 2003/2004, as VP europe for GS advising greek government. He now has a reputation to mend. And does it by being scholastic, chasing te Triffin Dilemma. Nice footwork to amuse the crowd. 

You know why he has been named to replace hardnosed, stingy, protestant Trichet by Merkel?

In the coming melt down of inevitable Eurozone collapse, ECB kicking of the can beyond 2013 will be critical for Merkozy's elections. And this is totally relevant, irrespective of the paper front end play of EFSF wind bagging.

Smaghi's brief :  Print baby print!! Then the FED, the BOE, the ECB will be on the same page!

Goodbye Trichet and good riddance, as now monetary hyperinflation is the name of the game to save the Oligarch's ponzi. And their political friends' re-election.

I was hoping Merkel would be Bismarck's daughter and have a game plan to make the EU break away from Pax Americana. But it looks like the financial ponzi cards have been too highly stacked by the Oligarchy; too risky at this stage for Germany to go it alone, as Sarkozy is called Mr 'Blabla' in Germany; second cousin to Berlu in terms of deliverability. This crisis has proven that Germany now towers over Euro zone economically today, and strategically and geo-politically will tomorrow.

So now the race to bottom is the only issue, with both sides of the pond kicking the can until it runs out of paper and people's confidence. Then deluge and reset. Then new paradigm change and shared governance, if possible; of world multilateral architecture with Chindia, Russia, Brazil. But its a long way to Tipperary, as we all know since WW1!




Fri, 10/28/2011 - 21:31 | 1823354 catch edge ghost
catch edge ghost's picture

...the Fed has supernormal powers. In theory, it can expand its balance sheet infinitely. It's ability to absorb massive amounts of new liabilities is theoretically limitless - much of which can be easily concealed from an accounting standpoint.

or... How I learned to Stop Worrying and Love the Fed.

One can view Ben and Timmy and all the rest as evil (possibly evil genius) or as skilled test pilots navigating a soft(er) landing.  Either way, you are going to have to bend over at some point during the ride.

Fri, 10/28/2011 - 21:39 | 1823365 Western
Western's picture

"skilled test pilots navigating a soft(er) landing."


That's a laugh.. and not because I don't think they're capable (which they aren't anyways, not at this point), but it's because I know these pilots aren't interested in saving my life, just their employers.

Fri, 10/28/2011 - 22:04 | 1823418 Justawhoaman
Justawhoaman's picture

I agree. They are more like two student pilots landing in a 747 having only "flown" a flight simulator... There is no instructor on board... Just us chickens.

Fri, 10/28/2011 - 22:23 | 1823466 hidingfromhelis
hidingfromhelis's picture

The last story I was told had the "students" not really being concerned with the landing.  I see some parallels.

Sat, 10/29/2011 - 06:24 | 1823950 malikai
malikai's picture

I take exception to the notion that Benocide and TurboTimmy are pilots. First of all, we pilots go down with our ship, regardless of success or failure. Good luck seeing Timmy or Benocide when TSHTF. Also, pilots tend to go to extreme lengths to understand the ship we are flying, the weather, and where other ships are in relation to us, if for nothing else because our own lives are at stake as well as the passengers.

Fri, 10/28/2011 - 22:36 | 1823518 LongBallsShortBrains
LongBallsShortBrains's picture

Any landing you can taxi away from is a great landing.
Any landing you can walk away from is a good landing.

Sat, 10/29/2011 - 12:40 | 1824323 Raging Debate
Raging Debate's picture

Yes Falak,

The job of global hight priest is supposed to be an all for one and one for all meme. I enjoy your commentary. God bless all people's of all nations over the coming decade. Those that decide to push the big red button will get just deserts for their shackling chains around our ankles as the titanic went down. Its an end of an era of 3d paradigm operations.

The titanic was going down no matter what but just like Titanic the rich grabbed the life boats reserved for women and children. So we will now protect them but don't expect a new temple license afterward.

Fri, 10/28/2011 - 21:34 | 1823357 menlobear
menlobear's picture

Looks like the podcast player is not working above. Here's a link to the interview on YouTube:


Fri, 10/28/2011 - 21:33 | 1823358 steve from virginia
steve from virginia's picture


Lessee, I read about two sentences ... too much debt, have to shrink it by devaluing currency ...

That will work in Greece whose debt is held (where it matters) by Greek banks who cannot roll it over. Greece (when it switches from euros to drachmas) will inflate its domestic debt out of its misery. (Its debt held outside the country it will repudiate as it will be denominated in euros. The only peeps in Greece w/ euros will be the mafias and they don't pay debts, they collect debts.)

It also works in China where there are lots of big, well-connected Chinese businesses with lots of dollars, which the businesses sell on 'the curb' at a rate far higher than the 'official' exchange rate. This devalues the yuan sharply (and inflates yuan prices at the same time.) Add dollar carry and the result is China hyperinflation which they are having right now.

It doesn't work in the US where there are a wide spectrum of dollar debt issues in all maturities, particularly shorter maturities. A debt coming due in 2012 will be indexed to the cost of money. For instance, the 2013 bond which replaces it will subtract the rate of inflation from the price pushing up the yield. Add to this the indexing of US government transfer payments to inflation. There is no way for the Treasury to inflate US debt out of existence, it's all indexed.

60% of US fuel is imported. If the US currency is devalued (rather, if it COULD be devalued) the fuel price would sharply increase. Gasoline prices aren't determinant but $4/gallon gas has been the point where the US economy falls back into deflation. It is motorists' restraint which sets the value of dollars. If the price gets too high the drivers stop buying, which revalues dollars upward. Last time I checked there were appx 250 million drivers in US. The US cannot devalue the dollar past a certain point for this reason.

As I have said here over and over, if the dollar dies the US ceases to be an industrial nation. It's that simple.

(PS, the US is going to stop being and industrial nation anyway  but that is another story.)

(PPS, soon!)

Fri, 10/28/2011 - 21:44 | 1823376 PeterB
PeterB's picture

Finally amongst a myriad of delusion some valuable insight & common sense.

Fri, 10/28/2011 - 22:26 | 1823471 Reese Bobby
Reese Bobby's picture

Choose your muse carefully.  War comes before efficient markets.  And there is ONE New World Order you crazy kids...

Fri, 10/28/2011 - 21:51 | 1823389 wombats
wombats's picture

I thought the US had already ceased being an industrial nation in any significant sense.

Fri, 10/28/2011 - 21:54 | 1823396 Pure Evil
Pure Evil's picture

Actually, the US has ceased to be a nation in any significant sense, much less an industrial one.

Sat, 10/29/2011 - 09:55 | 1824088 Matt
Matt's picture

And .. you thought wrong. ~$3.2 Trillion of GDP from industry; China is ~$2.7 Trillion for comparison. EU ~$4 Trillion; US soon to be third place. 


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